A busy day for Olympus press releases. In addition to the newly announced E-PL2 at about $600 (official thread) we have an announcement of their "ultra-compact flagship camera and first of a new series, the XZ-1". At a street price of only $100 less than the E-PL2 it would have to be good so, without further comment from me, here's what it looks like followed by the press release:

Olympus X Factor: Creating A New Breed Of Compact Camera

Dim the Lights and Get Ready to Shoot Brilliant Still Images and HD Videos With the X-tremely Bright, X-tremely High-Quality XZ-1

CENTER VALLEY, Pa., January 5, 2011 – On the heels of the PEN® interchangeable lens digital camera revolution, Olympus takes their compact digital cameras to the X-treme with the introduction of an ultra-compact flagship camera and first of a new series, the XZ-1. Developed for the photographer or enthusiast who is looking for the ultimate high-quality, high-performance premium compact camera, the XZ-1 offers all of this, and more without sacrificing image quality. Never fear the darkness with the XZ-1’s super-bright built-in Olympus iZUIKO lens – the first built-in Zuiko® lens on a compact digital camera. The X-factor that achieves this category-defying quality: A combination of three state-of-the-art features: the X-tremely large, super-sensitive CCD sensor, the X-tremely fast TruePic™ V image processor and the X-tremely bright, fast f1.8-2.5 iZUIKO digital lens. Further proof that Olympus lets you capture it all.

“The XZ-1 features one of the world’s brightest built-in lenses on a digital compact camera to enable you to shoot high-quality still images and HD videos in any shooting environment, including difficult low-light conditions,” said Katie Roseman, product manager, Olympus Imaging America Inc. “This camera will give you the versatility needed to take on any challenge without weighing you down.”

X-treme Creativity - The XZ-1 offers six Art Filters, each of which uses different settings to create incredible photographic effects that would otherwise require additional lenses, filters or complex editing. Additionally, the Live Guide on-screen setting offers quick tips for shooting different subjects (kids, pets and flowers, for example) assists the photographer with some of the more complex in-camera settings (aperture, shutter speed and exposure compensation, for instance).

X-factor StyleWhether you’re an experienced Digital Single Lens Reflex (DSLR) or PEN shooter who wants a second smaller camera for trips and nights out, without sacrificing image quality or performance, or the aspiring enthusiast who is ready for a higher-powered camera, the new trendy XZ-1 has the features you need for high-quality images. With its thin, attractive matte black body, you’ll be inconspicuous while you use the XZ-1 to take candid photos and videos in the shadows at a wedding reception. The XZ-1’s body is small enough to easily fit in your pocket, yet feels solid in your hands and you can easily take it with you everywhere.

X-ceptional Image QualityWhether composing still images or HD videos, photographers will appreciate the XZ-1’s sharp 3.0-inch OLED monitor to frame and show off still images and High Definition (HD) movies in detailed 720p. The LCD displays 610,000 dots in vivid color, reproduces colors and shades more accurately with deeper black tones and consumes less power. The monitor also provides a wide-viewing angle ensuring that images can be composed from even the most obscure angles. A new graphic interface makes it easier to read text and find the settings you need on the fly, and Live Control enables intuitive operation allowing you to shoot photos while viewing the effects on the camera’s LCD.

Shooting video is as easy as ever with the new Olympus XZ-1 camera. The camera captures all the action in crisp 720p HD video at 30 frames-per-second. The XZ-1’s easy-to-reach record button on the back of the camera body makes recording videos a breeze. If you’re about to snap a photo and you realize a video would capture the spirit of the scene even better, simply press the record button and instantly you’re capturing videos! Easily toggle back and forth between capturing stills and videos by using your index finger to press the shutter button or your thumb to press the record button. Having the ability to shoot still images and videos opens up a world of imaging possibilities.

The XZ-1 pairs a high sensitivity 10 megapixel CCD sensor with the TruePic™ V Image Processor to produce clear and colorful photos using all the pixel information from each image to provide the best digital images possible. The image processor is noted for accurate natural color, true-to-life flesh tones, brilliant blue skies and precise tonal expression; it also lowers image noise in photos shot at higher ISO settings (ISO 100 to ISO 3200), enabling great results in low-light situations.

The XZ-1 also offers the advanced manual controls that experienced photographers expect from digital SLR cameras. Shoot full manual, and also with a control ring around the front of the lens and the wheel controller on the back, the XZ-1 gives immediate access to the most important manual settings like ISO, aperture and shutter speed to make it easy to adjust the camera on the move. Three levels of exposure control using a neutral density (ND) filter distributes light offering greater flexibility to change the aperture and exposure time in different situations while allowing the photographer to take the best picture in any condition.

X-cellent Low-Light PerformanceThe iZUIKO f1.8-2.5 6.0-24mm (28-112mm equivalent angle of view in 35mm cameras) digital lens is a newly-developed 4x compact version of the legendary, high-quality ZUIKO digital lenses featured with Olympus DSLRs. With a minimum aperture of f1.8 at wide-angle and a maximum aperture of f2.5 at telephoto, this lens boasts super-fast shutter speeds for sharp, low-light images. This aperture range also allows photographers to take portraits that highlight the subject by defocusing the background, a capability that is not normally possible in compact cameras. The lens is specifically designed for clear, high-quality photographic performance. Apart from the speed of the f1.8 lens, the camera’s low-light mode automatically adjusts the ISO sensitivity up to ISO 3200 to take sharp, full-resolution photos in dark places. The camera’s iAuto mode automatically detects low-light scenes and adjusts the ISO accordingly for the best image quality. The camera also features an AF illuminator to make it simple to focus in low-light locations. The XZ-1 also features a low-light mode for even quicker access to maximize low-light situations.

If you’re going to an evening at the theatre, the XZ-1 also offers Dual Image Stabilization to further assure you’ll get the shot you want while holding the camera. Mechanical Sensor-Shift Image Stabilization compensates for camera movement in low-light conditions when shutter speeds are slower while Digital Image Stabilization freezes the action with high ISO sensitivity and fast shutter speeds that prevent blurry images often caused by a moving subject.

The XZ-1 has an easily accessible built-in pop-up flash to illuminate low-light subjects, reduce red-eye and fill in dark areas. The camera also is compatible with a range of optional external flashes, including the Olympus FL-14, FL-36R and FL-50R, so you can dynamically control lighting as your photography skills grow.

X-treme CreativityOlympus pioneered easy-to-use in-camera Art Filters for still images captured inside its E-System DSLRs and was the first company to offer the ability to apply Art Filters to HD video recordings captured with the PEN cameras. The XZ-1 features six Art Filters that photographers can apply to still images and HD video: Pop Art, Soft Focus, Grainy Film, Pin Hole, Diorama and Dramatic Tone. You even can create an in-camera slideshow that mixes still images, movies and sound. The camera incorporates five kinds of background music as well as slideshow control functions, including still image fade-in/out, sound recording volume and background music volume adjustment.

The XZ-1’s Live Guide interface simplifies great photography and provides the results you desire at the touch of a button. Want more vivid or muted color in your shot? Want warmer or cooler color? Want a brighter or darker subject, or a sharper or softer background? Or maybe you want to capture the fast-moving action of your subject with a little artistic blur? Simply select Live Guide and press the up and down arrows on the back of the camera to slide through numerous photographic effects. Make adjustments and watch the LCD as the effects are made live – before the image is captured!

X-cessorizeTo expand the camera’s versatility, the XZ-1 includes an accessory port so photographers can attach optional accessories like the SEMA-1 external microphone adapter, the VF-2 electronic viewfinder or the newly introduced MAL-1 Macro Light. These optional accessories easily slide into the camera’s accessory port and hot shoe.

The new camera’s compact design makes it the perfect companion for all of your dive trips. The PT-050 underwater case has been customized for the Olympus XZ-1 and is waterproof to a depth of 40 meters (approximately 130 feet). With its durable, high-quality polycarbonate construction, this Olympus housing protects the camera from water while also cushioning it from knocks and bumps on land.

The XZ-1 makes sharing your content easier than ever. Just connect it to your HDTV with an optional HDMI cable and use your HDTV’s remote to control playback functions and navigate the camera’s menus from the comfort of your couch.

Colors and AvailabilityThe Olympus XZ-1 comes in black and white and will be available in January 2011. It includes the XZ-1, USB Cable, Video Cable, Li-Ion Battery Pack, Li-Ion Battery Charger, Shoulder Strap, OLYMPUS [ib] software CD-ROM, Manuals and Registration card.

U.S. Pricing / Product ConfigurationsXZ-1 Street Price: $499.99

Once one gets past all the X-itement this might be a compact to keep an eye on as the reviews come out as that f/1.8-2.5 aperture looks to have the edge on the opposition.

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Well, I won't pass comment on that but the more I read about the XZ-1 the more I see to like. It's hard to see what else they could have included short of GPS and there's a strong possibility that this could be the best enthusiast's compact camera bar none. Mind you, at that price it really has to be. The CameraLabs review should make for a very interesting read.

It'll certainly be interesting to see how it compares to things like the Canon G12 and S95. But yes I agree, as I've said in my reviews of those models, it's hard for a traditional enthusiast compact to compete against EVIL models.

I've had an S90 for over a year and I'm pretty darn happy. However, it can only take so many drops to the concrete (almost 10 by now? - which says a lot for its durability) so it's only a matter of time before it dies, but hopefully not. If that day comes, I'll have to face off between the S95 and this one. On paper, it seems to do everything a little bit (but not much) better than the Canon (f/1.8, 112mm, ISO 6400) except for the price tag and size. After taking a look at the sample images on dpreview, I'm impressed with its IQ. This might be a camera I'll be owning in the future.